India event Update: by IIFL: Nov 19th, 2010

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Dabur India (Acquisition to strengthen African portfolio, ADD): Dabur’s acquisition of US-based Namaste Laboratories is a move to develop a complete personal-care portfolio for Africa. Namaste manufactures hair-care products specially formulated for African Americans, and draws c11% of its current sales from Africa. Dabur’s management looks to significantly expand its product footprint in Africa while maintaining stable growth in the US market. The transaction is EPS-accretive by 4-5% in the near term and is a good strategic fit over a 3-5 year horizon for Dabur’s fast-growing Africa business. While near-term margin pressures in the Indian FMCG business due to steep raw-material inflation remain an overhang on the stock, Dabur’s medium-term prospects remain strong, given its differentiated brand positioning and diversified domestic and international business. We retain ADD.

Dumb Commodities (Money for nothing): In an early September issue, Dumb Commodities, employing high-school chemistry, advised Potash shareholders to sell the stock and run. In this issue, we argue that BHP Billiton is more like a (bad) commodity ETFs investor than a mining company. We explain the value-capturing stages of mining projects, and advise getting out of mining majors and buying into development-stage miners.

Corporate Front Page:

- NALCO, JSW Steel and Jai Prakash Industries have evinced interest in setting up an aluminium refinery and aluminium smelter in Kutch, Gujarat. (ET)

- JBF Industries has acquired 100% stake in its unit JBF Global Pte ltd for US$104mn. (BL)

- Sun Pharma has received US FDA approval to market Clarinex tablet and Tiazac Capsules. (ET)

- The Air India board has recommended removal of the chief operating officer of its low-cost arm Air India Express

- ONGC to invest Rs5bn in renewable energy R&D. (BS)

- Tata Group Chairman made it clear there were no change in his plans to retire in 2012

- Bharti Airtel crosses 200mn subscriber mark; sports a new brand logo. (ET)

- Promoters of Patni Computers, General Atlantic, revive plans for stake sale. (ET) 

- BEL expects Rs7bn order for coastal surveillance. (BS)

Economy Front Page:

- TRAI asks government to cancel 69 licenses of six telecom companies. (BL)

- Food inflation drops to a 12-month low of 10.3% for the week ended November 6^th 2010. (ET)

- India’s GSM subscriber base grew 3% in October with addition of 14mn customers. (ET)

- FDI inflows rise 40%yoy in the month of September to US$2.1bn. (ET)